A new study found that Iran Today they make up 4.5 percent of the world’s Bitcoin mining and that the country is using the technology to generate hundreds of millions of dollars in cryptocurrency assets to circumvent crippling sanctions imposed by the US and other countries.
Washington has imposed economic penalties on Tehran since the 1979 Iranian Revolution in opposition to its nuclear program and support for groups in the Middle East that the US view as terrorist organizations.
In their current form, the sanctions represent a near-complete economic embargo and ban on all imports, most detrimental to the country’s oil, banking, and shipping industries, which has resulted in the former falling 70 percent in a decade and being inspired Recession, unemployment and regular outbreaks of civil unrest.
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However, new research from blockchain analytics firm Elliptic suggests the country has turned to crypto mining as a new lifeline and a means of commercializing its energy potential. This is considerable and relatively inexpensive as Iran is the world’s largest producer of natural gas.
Since 2019, the country has recognized Bitcoin mining as a lucrative business practice and quickly set up a licensing system under which miners have to pay a higher tariff for their electricity consumption and resell their mined bitcoins to the central bank.
Since then, bitcoin farms have popped up across the country, including mosques where electricity is free. As a result, Iran can actually sell its energy plants indirectly on the world markets and thereby circumvent trade embargoes.
The bitcoins earned can also be used to pay for imports, which allows miners to bypass the restrictions on conducting transactions with Iranian banks.
While the exact extent of Bitcoin mining in Iran is difficult to measure, according to 4.5 percent, Elliptic is based on data collected from miners by the Iranian government Cambridge Center for Alternative Finance until April 2020 as well statement from the state-controlled Iranian power generation company in January 2021, which shows the sector consumes up to 600 MW of electricity.
The electricity that the miners consume would have to produce around 10 million barrels of crude oil annually – around 4 percent of total Iranian oil exports last year.
While Iranian crypto mining activities could currently generate around $ 1 billion in annual revenue, they are also putting a significant strain on the country’s creaky energy infrastructure network.
To counter this, several Chinese companies such as RHY and Lubian have reportedly made new investments and established their own farms in the Rafsanjan Special Economic Zone in the southeast of the country.
“We have good local resources in Iran and we have good relations with the Ministry of Energy, the Ministry of Foreign Affairs and even the Iranian Army,” he said in a statement too 8BTC.
“Financial institutions should consider the risk of sanctions they face from Iranian bitcoin mining – especially those starting to offer cryptoasset services,” said Dr. Tom Robinson, Elliptic co-founder and chief scientist.
“If 4.5 percent of Bitcoin mining is located in Iran, there is a 4.5 percent chance that, in a Bitcoin transaction, the sender will pay a transaction fee to a Bitcoin miner in Iran.”